Local merchants say sales tax holiday is boost for business

News file/Linda StelterSusan Day, one of the owners of The Lili Pad and Gigi's children's clothing shops in Cahaba Heights, says Alabama's sales tax holiday is a boost for local merchants.

BIRMINGHAM, Alabama -- Alabama's back-to-school sales tax holiday weekend, which kicks off Friday, is a major benefit for local merchants, say two Cahaba Heights shop owners.

Katherine McRee and Susan Day,
owners of the children's clothing shops, The Lili Pad and Gigi's, say
their sales increased about 40 percent in August 2006, when the state's first
sales tax holiday weekend was held, compared to August 2005. And sales have continued to grow.

Over the years, they have added their own incentives for shoppers,
including opening on Sunday, a day the stores are normally closed.

And, since the stores are located in Jefferson County, which does not
participate in the holiday, they pay the county sales tax so customers
can shop tax-free.

The group says the holidays are poor substitutes for comprehensive tax reform.

McRee and Day
say they believe the discounts prompt shoppers to buy more than they
would have on a typical day, and the sales tax holiday weekend has
become bigger than Christmas or Easter.

"It gives us a major boost going into fall, and it is our busiest weekend of the year, period," McRee said.

The Alabama Retail Association is also defending the sales tax holiday.

The group says it is a way to draw consumers into stores, where they also spend money on products that aren't exempt.

The ARA has pushed for comprehensive tax reform, including sales
tax reform, for years, said Alison Wingate, ARA vice president. And
while the sales tax holidays are not a replacement for that, they still
provide an economic boost for communities and relief for families across
the state.

"The back-to-school
sales tax holiday this weekend will provide families with a little bit
of relief from sales taxes that, in many Alabama cities, combine for
over 10 percent," she said. "For families in Alabama, a 10 percent
savings on their back-to-school expenses is hardly a gimmick."

In Alabama, the back-to-school sales tax holiday runs Friday through
Sunday, and items ranging from pencils and notebooks to clothing and
computer equipment is exempt from the state's 4 percent sales tax, as
well as sales tax in participating counties and cities.

The holiday has
proved popular with Alabama businesses and consumers, as many stores
offer additional discounts and special events to coincide with the tax
savings. Total sales tax collections for the month of August have
increased most years, the ARA says.